Michigan's $483 million surplus may go to road repairs

LANSING (AP) -- There was no dearth of ideas about what to do with the state's newfound $483 million surplus on Wednesday after Michigan budget experts made the dollar figure official.

Spend more on road maintenance or schools. Cut taxes. Save more for when times get bad. Pay off debts and liabilities.

"The feeding frenzy has begun," House Speaker Jase Bolger said. "Everyone under the sun has new ideas and new ways to spend this money."

Gov. Rick Snyder's administration and legislative economists agreed on a tax revenue forecast Wednesday that shows Michigan is expected to get an estimated $483 more than expected in January for the fiscal year ending in 4 1/2 months. That surplus, coupled with better-than-expected tax collections projected for the next fiscal year, means lawmakers have an extra $700 million to use in finalizing a roughly $49 billion spending plan in coming weeks.

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Snyder and Republicans in control of the Capitol want to plow more money into road maintenance if no long-lasting boost in transportation funding is passed soon.

"Transportation is a top priority. ... The first place we've said that we need to look before going to the voters is existing resources," said Bolger, a Marshall Republican. "I expect that we need to look to roads."

However, he and others urged caution because at least half this year's unanticipated revenue growth was attributed to people selling stocks due to worries about potential federal tax increases before a New Year's "fiscal cliff."

"It's a one-time situation at least as far as we're concerned. It's kind of like hitting the lottery once," said Jim Stansell, senior economist with the nonpartisan House Fiscal Agency.

Snyder's budget director, John Nixon, said a "great place" to put such a one-time revenue increase is toward fixing roads and bridges, since it cannot be built into ongoing budgets. The Republican governor's $1.2 billion proposal to raise gasoline taxes and vehicle registration fees remains stalled in the Legislature along with alternative plans that would ask voters to increase the sales tax.

"We're losing $3 million a day in the deterioration of our roads. That adds up real quick. So any money we can add into roads to help stop the bleeding is going to help," Nixon said. "They can go out and build a bridge, which is a one-time expenditure."

But Democrats say people should get tax relief, considering they were forced to pay more to mostly offset a Republican-backed cut in business taxes two years ago. They want to no longer tax pension income and reinstate tax credits for homeowners, children and low-income workers.

K-12 schools and colleges deserve a bigger bump in state aid, according to Democrats. Schools, universities and community colleges are in line to get an overall 2 percent funding increase.

"We believe that it's far more important to invest in people through education than it is to invest solely in infrastructure. Both are important, but education is more important," said House Minority Leader Tim Greimel, an Auburn Hills Democrat. "This is a no-brainer about what to do with this money. We should return it to the Michigan families from whom it came and invest it in education."

Of the $483 million in additional revenue this budget year, nearly $397 million is in the state's $9.2 billion general fund, which pays for general services outside of education. Nearly $86 million is in the $11.2 billion school aid fund.

Asked about the possibility of a tax cut or refund, Nixon said: "We have a lot out there we still need to address like roads and other infrastructure issues."

Bolger, though, said a tax cut was "certainly on the table" before declining to elaborate further.

Local government officials said some of the surplus could augment revenue-sharing payments to cities and townships that saw their state aid cut in the past. Advocates for the poor said some of the extra dollars could alleviate Republicans' concerns about the long-term cost of expanding Medicaid eligibility to more low-income Michigan adults.

House Appropriations Chairman Joe Haveman, a Holland Republican, said he would like to use the money to help transportation funding while lawmakers look for a permanent solution. Michigan's fixed per-gallon gasoline tax -- last raised in 1997 -- is not keeping pace as people drive less and with more fuel-efficient cars.

"Let's not kid ourselves that this is going to fix the road problem. This is a drop in the bucket," Haveman said. "We use it at a down payment to show people that we're serious about it and go back to our long-term fix."

Also Wednesday, legislators received relatively good news about the state's economy. Economists reported that Michigan is in a fourth straight year of modest recovery, thanks in part to a rebound in home sales.

The state is on pace to add more than 370,000 jobs from early 2010 through 2015, making up for massive losses in 2008-09. The bad news is Michigan lost more than 850,000 jobs all together from 2000 to early 2010.

"We have a ways to go, but we're seeing forward progress nonetheless," said University of Michigan economist George Fulton.